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Introduction:

In a rapidly changing business environment, which is influenced by many factors, it is important for businesses to safeguard against the liabilities caused by the disruption in the supply chain. Thus contract management has not only become ever more important these days, but has been viewed by businesses as one of the most important corporate risk mitigation factors, as such, legal contracts are important part of contract management.

SAP Sourcing/SAP CLM provides capabilities for legal contract management for strategic sourcing needs of the businesses. The functionality includes effective management of electronic repository for legal contract, support of authoring and efficient management of legal clauses, managing workflow for the approval for legal contracts, rich analytics and seamless ERP integration.

With version 9 of SAP Sourcing this capability has been further extended by enhanced integration with SAP Business Suite components through integration with central contracts in SAP SRM.

A central contract in SAP SRM itself integrates seamlessly with SAP ERP and in fact, provides capability of integrating with multiple ERP systems. Thus the current integration between SAP Sourcing agreements and the SAP SRM central contract extends the multi-back end capability to SAP Sourcing agreements too.

This integration bridges upstream strategic sourcing and contract management processes with downstream operational procurement processes and thus extends the value to entire organization.

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The following benefits can be attributed to the integration between agreements in SAP Sourcing and SAP SRM central contracts:

1.   Brings together the legal contract and operation contract and provides single view of complete contract.

2.   Provides complete end to end contract management solution

3.   Binds together the upstream strategic sourcing and contract management with downstream operational procurement

4.   Helps drive better contract compliance

 

SAP Sourcing CLM agreement integration with SAP SRM central contract:

Version 9 supports the replication of agreements to create central contracts in SAP SRM synchronously. The trigger of replication is manual and is controlled by user action. When the replication process is successful the agreement will be updated with the central contract reference number. In case of unsuccessful replication user will be informed about the error.

This integration assumes that there is common master data between SAP Sourcing and SAP SRM such as materials, suppliers, plants, purchasing organization, etc..

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The following section will give you overview of the integration scenarios that are supported in version 9.

1.   Replication of SAP Sourcing Agreement with line items

This process typically starts in SAP Sourcing with the creation of an RFx, including line items to be sourced. The supplier responses within the RFx can be analyzed and during awarding an agreement can be created which includes negotiated prices for line items along with other terms and conditions.

A legal contract can be negotiated as part of the agreement. After approval of legal contract, the agreement can be replicated to SAP SRM and can be used as a source of supply within SAP SRM for self-service procurement process or can be replicated to ERP systems and used as source of supply.

In this scenario, changes can be done in the agreement in SAP Sourcing and can send updates to central contract. Changing central contract directly in SAP SRM will be not possible.

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2.   Replication of SAP Sourcing agreement without line items

 

This process typically starts with creation of an agreement directly to create the legal contract, while all operational negotiations will happen in SAP SRM. An agreement in such cases will not have any line items on SAP Sourcing. After approval of the legal contract, the agreement can be replicated over to SAP SRM to create a central contract without any line items. Further central contracts can be enhanced with line items and prices. However the line items will not be updated back to the agreement in SAP Sourcing.

      This scenario is important for procurement of complex materials, services and large contracts.

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Support for centralized sourcing:

With version 9, SAP Sourcing supports importing materials from multiple ERP systems and include them in a single sourcing document, which enables central sourcing of strategic materials by global purchasing organization. This helps in efficient execution of the corporate strategy centrally by responsible single global purchasing organization. This also helps combining the requisitions from different subsidiaries and gain tactical advantage for better negotiation.

A single agreement can contain materials from different ERP systems and this can be replicated over to the SAP SRM central contract. Furthermore, the SAP SRM central contract can be distributed to multiple ERP systems and used as source of supply.

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Notes:

1.   The current integration supports only integration with SAP SRM central contract  which is available in SAP SRM 7.0, SAP SRM 7.01 and SAP SRM 7.02

2.   SAP PI/XI is required for this integration

3.   This integration requires an add-on installation in SAP SRM

Additional information on SAP Sourcing/SAP CLM version 9:

For additional information on other new capabilities in SAP Sourcing version 9.0, please refer to the following blogs:

·        New Features in SAP Sourcing Wave 9–Part 1: Strategic Sourcing

·        New Features in SAP Sourcing Wave 9–Part 2: Contract Lifecycle Management (CLM)

·        New Features in SAP Sourcing Wave 9–Part 3: Usability

If you are interested in ramp-up for version 9.0 please do contact David Wong (david.wong@sap.com) or Frank Neumann (f.neumann@sap.com).

I would like to invite your comments on how you and your organization can benefit from this functionality.

 

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39 Comments

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  1. Jesse Rau

    Great article.

    I have 1 question for you: if I want to use CLM as a standalone application (without integration with SRM or ECC), can CLM connect to SAP BW directly?

    (0) 
    1. Mahesh Holenarasipura Post author

      Hi Jesse Rau,

      Thanks for your question.

      For now we dont have ability to directly transfer the contents from CLM to SAP BW directly. However, you can export the CLM MA/SA meta data into excel files and import them to BW.

      Best regards

      Mahesh

      (0) 
  2. KOPPISETTI VENKATA SATHYA KUMAR

    Hi,

    Good to know about seemless integration among these systems, however typically bidding occurs in the SRM system in such case would it possible to transfer this bid response to CLM and create a contract. Please clarify me.

    Thanks and Regards,

    Venkata Koppisetti.

    (0) 
    1. Mahesh Holenarasipura Post author

      Hello Venkata,

      Thanks for your question!

      One of our customer who uses SRM bidding engine, creates the central contract first in SRM and then create corresponding MA in CLM!  To support his process is in our roadmap.

      One thing I can imagine is to use the scenario 2, when Bidding is done, using the response details, one could manually create MA without line items, replicate it to create central contract in SRM and import the line items into SRM central contract. I understand it is not seamless, but could be an option.

      I would be interested to know if you think otherwise!

      Best regards

      Mahesh.

      (0) 
  3. Ankur Goyal

    Hi Mahesh,

    Thanks for such a good information.

    It would be great if you can throw some light on integration of the CLM and SRM in a technical way, like which all Prerequisites need to be implement and the vairous other integration prcoess to be followed.I thibk its a very common need of the industry now and we should capitalise on the capability of the System.

    Thanks,

    Ankur Goyal

    (0) 
    1. Mahesh Holenarasipura Post author

      Hi Ankur,

      Thanks for your post.

      A second blog is on the way which will address the techical details. Please watch out for it in this space.

      Best regards

      Mahesh.

      (0) 
  4. Anthony Vincent

    Hi Clinton,

    Thanks for your post…it was very informative.

    Cuple Questions:

    1. Does SAP CLM standalone (without SAP Sourcing) covers the functionality of the Rfx, tendering process?
    2. If not, if we proceed to implement SAP CLM standalone right now, can we eventually implement RFx in SAP sourcing if we decide to expand in the future?

    Thanks for you time

    Regards

    Anthony

    (0) 
  5. Carlos Aguirre

    Hello Manesh, couple of questions:

    I understand that you can not modify a central contract in SRM if you created it from a Legal contract in ESO, my question is if there is also a restricion to modify in SRM if you create a master agreement with line items only (not legal contract).

    Please let me know.

    thanks

    Carlos

    (0) 
  6. Vladyslava Simonova

    Dear all,

    Can somebody please help with understanding of contract management and make a clear description of differences between “SRM Central contract management” and “SAP Sourcing/CLM” and combination of both?

    Reading SAP documentation I have the feeling that both allow creation and modification of contract centrally, that afterwards is transformed to purchasing contract in ECC.

    As I see Sourcing/CLM allows to manage administrative part of contract (legal), provides library of clauses…what type of contracts then we can create in SRM when is not used with functionality of CLM?

    Thanks a lot in advance for helping

    (0) 
  7. Subrote Mohapatra

    Hi All,

    do we neccesarily have to use the specific MA type for CLM-SRM contract integration? We have different MA types and there may be a need to integrate any MA of any type to SRM.

    Thanks

    Subrote

    (0) 
  8. Martha Obeso

    Hello All,

    If we have SRM for the bidding process and we want to integrate with CLM, can you tell me the best way to integrate it? If someone already did it, I would appretiate your comments.

    Thanks in advance

    (0) 
    1. Venkateshwara Prasad Kothapalli

      Hello Martha,
           It depends what exactly you would lke to do in SAP Sourcing/CLM Vs. what business process in SRM..

      The standard delivered product supports creation of Central contracts in SRM that are sourced and negotiated (with legal clauses etc,) in SAP Sourcing.

      Prasad

      (0) 
  9. Martha Obeso

    Thanks Prasad 🙂

    We are doing the sourcing process in SRM. Specifically we would like to create the RFQ in SRM (since no sourcing was licensed in e-Sourcing, just CLM)  and instead of creating the Central contract in SRM, it should be created in CLM, then after the legal contract creation in CLM and proper workflow is finished, it must be replicated in either SRM and ECC. We know that it is necessary a development to do this, please let us know the best way to solve this issue. Thanks a lot for your help!

    (0) 
  10. Neelesh Sharma

    Hello Team,

    We are replicating master/child agreements from CLM to SRM and have the following questions. We are still doing configuration..it is not yet complete.

    Note: we are sending agreements with line items from CLM to SRM and don’t want users to change anything in SRM system.

    1. How is the hierarchy replicated from CLM to SRM? Suppose, you have a master agreement with two sub-agreements. How will it look like in SRM?

    2. When a master agreement or sub-agreement is replicated from CLM to SRM, what is the status of the operational contract in SRM such as “Saved”, “Awaiting approval” or “Released”?

    I would really appreciate your responses. Please help.

    Thanks,

    Neelesh

    (0) 
    1. Ed Dunne

      Hi Neelesh,

      Re: your first question:  Replication of the CLM hierarchy into SRM is not currently supported in the CLM SRM integration implementation.  However, this capability is in our Master Product Backlog and is being considered for a future release.  Currently, when a CLM master agreement or CLM sub-agreement is replicated to SRM, independent SRM Central Contracts are created for each CLM agreement.

      Re: your second question: When a master agreement or sub-agreement is initially replicated from CLM to SRM, the status of the SRM Central Contract created is “Saved”.

      Regards,
        Ed

      (0) 
  11. Neelesh Sharma

    Thanks Ed for clarification. These things are not there in integration guide.

    Do you have any idea, when is SAP coming up with agreement hierarchy replication? Any rough estimate is also fine….

    Thanks,

    Neelesh

    (0) 
    1. Ed Dunne

      Hi Neelesh,

      I would like to get the CLM to SRM hierarchy replication feature implemented in Release 11.0.  However, we are still in the early stages of planning for Release 11.0 and the candidate feature set has not been finalized yet.

      Regards,
        Ed

      (0) 
  12. Neelesh Sharma

    Hello All,

    Thanks much for responding quickly. I have a question for you..

    When we are publishing a master agreement from CLM to SRM, we are  getting the pop-up with warning message. It says, “Premature end of file”. What is it? I don’t understand it.

    Appreciate your response.

    Thanks,

    Neelesh

    (0) 
  13. Neelesh Sharma

    Hello Ed and All,

    Just wanted to inform that the previous problem related to pop up warning message, “Premature end of file” has been resolved.

    Now we are facing other issue while publishing the master agreement from CLM to SRM. The problem is, the pricing information is NOT flowing along with master agreement from CLM to SRM. Though the pricing is there in CLM master agreement, but there is no pricing in corresponding SRM contract.

    have you seen this problem? Appreciate your any advice.

    Thanks,

    Neelesh

    (0) 
    1. Venkateshwara Prasad Kothapalli

      Hi Neelesh,

            Have you extracted the price conditions from SRM using the report ‘/ESOSRMIN/BBP_ CONDDATA_EXTRACT’. Can you please check this first. If you have done it and still face the same problem, please create an OSS message and provide the details so one of us can investigate..

      Regards

      Prasad

      (0) 
        1. Venkateshwara Prasad Kothapalli

          Hi Mathweus,
                The standard solution only supports connecting to multiple ECC via the SRM. There are various customers that have used a custom solution to connect directly to multiple ECC systems directly – but this is a custom solution and will not be supported by SAP.

          Hope this answers..

          Regards

          Prasad

          (0) 
  14. Neelesh Sharma

    Hello Prasad and All,

    Now we are able to publish agreements from CLM  to SRM. It is working fine. Thanks for your help and guidance.

    We have two types of agreements in CLM one is, where we have material item and the second one is product category item, where you create line items with only product category.

    When the agreement is published in SRM, “item category” is always (in both cases) coming as “Normal”, which is defined in SRM only for materials.

    Because of that, we are not able to use product category contract down in the procurement cycle like shopping cart.

    I have checked the “Integrated Document Configuration” in SETUP…we are sending “Item_Cat” from CLM to SRM..

    Can you please help, what is missing at our end?

    Thanks,

    Neelesh

    (0) 
    1. Venkateshwara Prasad Kothapalli

      Hi Neelesh,

          The current standard solution only supports item types of ‘Material’ and ‘service’. If you need to support ‘Product categories’ you will need to customize the solution to do so.

      One way to do that will be to detect the line item of type ‘Product category’ and then set the item category field going to SRM appropriately, you will do this in the PI mappings.

      Prasad

      (0) 
      1. Neelesh Sharma

        Thanks Prasad for your thoughts. It really helped. We are trying to achieve this.

        We have created the “Product Category” value in the “Item_Category” value list in the CLM system. However we are not able to see this value in the line items while creating the master agreement. I can see only two options for “item  category” in line items in master agreement such as material and service.

        my question to you is, why I am not able to see the the value, “product category” in line items? Any idea?

        Any thought is much appreciated.

        Thanks,

        Neelesh

        (0) 
        1. Venkateshwara Prasad Kothapalli

          Neelesh,

              I don’t think that will work.. what you have to do is enter some free text in the description field(of line item) or a token like ‘PC’, that you can check for in the PI system and then mark that line item as ‘Product category’.

          Prasad

          (0) 
              1. Neelesh Sharma

                Yes Prasad, we are trying to integrate with SRM. But I still believe, enabling “item category” at line item is based on the system property. That we have done it and it is working fine. All we need is to populate the right option in the drop down, “value list” and then we can manipulate at PI level based on the drop down values.

                Thanks,

                Neelesh

                (0) 
  15. Gopi Krishna

    Dear All,

    Request you experts to provide us info about attachments in CLM-SRM integration.

    Currently we see no attachments being transferred from CLM to SRM when they are existing in the Master Agreement.

    Thanks and Regards,

    Gopi

    (0) 
  16. Rehman Ghumaan

    Dear All,,

    hope you are all doing fine.

    I´m standing in front of a riddle!

    I´m sending from the CLM-System a Contract to the SRM-System.

    This can also be created without problems in the source system, as long as we have registered for the appropriate document type in the SRM as “internal number range”.


    But I want that the central contract is created in SRM with the “external number” and thus there is a single number for the contract.

    Thus, this number would be the same in CLM and SRM.

    Unfortunately, the SRM central contract always requires an ” internal number “.

    If this is not available, then there is a error (CX_SY_REF_IS_INITIAL) in the distribution of CLM contract at SRM.


    Experts, do you know if a BAdI in the Component “ESOSRMINT” exists, which can help me?


    Thank you very much and best regards


    Ghumaan

    (0) 
  17. SheiLLa Melo Souza

    Hello,
    As you have mentioned, this process integration will work fine if the process starts on SAP Sourcing.
    However, a customer also can buy exclusive SAP CLM licence and integrate it to SAP SRM so, for this case, there is a missing standard integration solution.

    In other words, if the process begins in SAP SRM (Shopping Cart-RFx-RFx Award-SRM Contract) and it has to be integrated to SAP CLM just for Legal Document elaboration, it is clear the standard integration does apply and it would be necessary some developments.

    Do you know if SAP has plans to deliver a STANDARD solution for such case?

    Best Regards, Sheilla Melo

     

    (0) 
    1. Sajid Amir

      Hello Sheilla,

      Please only use ‘Alert Moderator’ for the reasons mentioned in our Rules of Engagement: https://www.sap.com/community/about/rules-of-engagement.html

      Thanks,

      Sajid

      (0) 

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